Dairy farmers still feel pinch

The reminder of the 2016 milk price crash is constant for Katunga dairy farmers Bridget and Tim Goulding who are one of many Bonlac and Fonterra suppliers still repaying a Fonterra Australia Support Loan.

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For Katunga dairy farmers Bridget and Tim Goulding, the milk price crash may be long over, but they have a constant reminder each time the milk cheque comes.

Like more than a third of Bonlac and Fonterra suppliers, the Gouldings were forced to turn to their processors to keep things moving and take out an optional Fonterra Australia Support Loan.

Unlike Murray Goulburn suppliers whose debts under Milk Supply Support Packages were forgiven in May 2017, the Gouldings and many others are still making repayments on their loan.

What happened in the days, weeks and months following the crash had ‘‘bastardised’’ the dairy industry according to Mrs Goulding, and although they acknowledged their repayments were smaller than most, the Gouldings said it was just another obligation they had to meet with the milk cheque, made worse by a year of low rainfall and high feed and water prices.

‘‘It’s just another commitment. It has hugely affected our business,’’ Mr Goulding said.

‘‘We could leave (and supply another company) but we have a FASL loan. I think the ones that have left are hugely brave,’’ Mrs Goulding said.

‘‘Some people have got huge loans ... How on earth can you pay that off?’’

With Bonlac’s supply agreement with Fonterra finishing up next year, the Gouldings said other opportunities must be thoroughly explored.

In a May 2017 Global Dairy update posted on its website, Fonterra explained its decision not to forgive the loans.

‘‘Unlike the MSSP, our FASL was optional. Around 40 per cent of our suppliers took out a loan, and there was significant variation in the amount borrowed,’’ the business update said.

‘‘There are farmers who did not take out a loan — some borrowed externally, others self-funded — and they were just as affected by last year’s milk price revision.

‘‘If we forgave the loan, only the 40 per cent of farmers that took out the FASL would benefit and it would be inequitable for our total supply base.’’

Ultimately, Mrs Goulding said the FASL loan was a reminder of a dark time in the industry that many were still facing.

‘‘Look what it’s done to the dairy industry, it’s like the final nail in the coffin almost,’’ she said.